New welfare system for SA by 2019

Cape Town - South Africa plans to bring in a new welfare-payments system over the next two years and hasn’t yet signed a new interim contract with Net 1 UEPS Technologies, the government said.

Cash Paymaster Services, a unit of Net 1, will continue making payments while new social-grants arrangements are implemented, Social Development Minister Bathabile Dlamini told reporters in Pretoria on Sunday. The welfare department is still negotiating a new deal with the company, whose existing disbursement contract ends on March 31, according to Dumisile Ndlovu, the department’s acting executive manager for corporate services.

The department and South African Social Security Agency, or Sassa, are scrambling to ensure more than 17 million people continue to get their money next month. The payments of more than R140bn a year are a signature policy of the ANC, which says the grants are an important measure to reduce inequality in the nation almost 23 years after the end of white-minority rule. In previous election campaigns, ANC officials have told rallies that if another party came to power, the payments may end.

“On 1 April, Sassa begins a new era,” Dlamini said, adding a “transition” phase would end in March 2019. “As has been the case in the past, no one will go unpaid.”

Dlamini refused to take questions about the resignation of Zane Dangor, the head of the social development department, or about her working relationship with Sassa CEO Thokozani Magwaza, who is on sick leave. President Jacob Zuma on Saturday called in Dlamini and Finance Minister Pravin Gordhan to a meeting and ordered them to ensure the payments are made.

While that contract with Net 1 was ruled invalid by the Constitutional Court, the welfare agency hasn’t complied with an order to hold a tender to find a new service provider. Negotiating a new contract with Net 1 could potentially be circumventing the earlier court ruling. It would also be against the advice of the finance ministry which, along with the country’s central bank and the national Post Office, has proposed alternatives to using Net 1.

“This is an own goal scored by Minister Dlamini,” Karima Brown, an independent political analyst, said on broadcaster eNCA. “She should do the honourable thing and resign.”

A new contract will cost the government more than the current deal. A letter filed as part of a Constitutional Court application last week showed the fee Net 1 will charge per beneficiary under a new or extended contract may rise to R22 to R25, from R16.44 currently.

Over the next two years, the welfare department will work with the department of home affairs to help authenticate recipients and the government will at some stage use the Post Office to help distribute the money, Dlamini said.